Hypnotic-dependent insomnia (HDI) refers to insomnia maintained by the chronic use of sleep medications (hypnotics) with associated tolerance and dependence. As disproportionately high users of hypnotics, older adults are most likely to develop HDI, and they are most vulnerable to the negative side-effects associated with chronic benzodiazepine use. The efficacy of psychological treatments for insomnia is well established, but there has been relatively little research on the use of these same treatments for people with insomnia who are also dependent on hypnotics. The planned study will treat 90 older adults diagnosed with HDI secondary to benzodiazepine use in a randomized experiment with three conditions: scheduled gradual hypnotic withdrawal supplemented by a placebo desensitization, and scheduled gradual hypnotic withdrawal only. Assessments at baseline, post-treatment/withdrawal, and 1-year follow-up will include monitoring of hypnotic consumption, self report and laboratory sleep evaluations, drug screens, and measures of psychological and global functioning. Side-effects during the drug withdrawal period will also be monitored by self-report. The study will attempt to determine if adding psychological treatments to gradual drug withdrawal will improve success of drug withdrawal, diminish withdrawal side-effects, improve sleep, or improve psychological and global functioning compared to gradual drug withdrawal alone in the management of HDI with older adults.